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Why Is Edison International (EIX) Down 1% Since Last Earnings Report?

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Zacks Equity Research
·3-min read
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A month has gone by since the last earnings report for Edison International (EIX). Shares have lost about 1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Edison International due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Edison International Q1 Earnings & Sales Lag Estimates

Edison International reported first-quarter 2020 adjusted earnings of 63 cents per share, which missed the Zacks Consensus Estimate of 77 cents by 18.2%. The bottom line remained flat year over year.
 
Excluding adjustments, quarterly earnings came in at 50 cents per share from continuing operations compared with 85 cents in first-quarter 2019.

Total Revenues
 
Edison International's first-quarter revenues came in at $2.79 billion, lagging the Zacks Consensus Estimate of $2.97 billion by 6.6%. Moreover, the top line declined 1.2% from the year-ago quarter’s $2.82 billion.
 
Operational Highlights
 
In the reported quarter, total operating expenses increased 0.6% year over year to $2,488 million. Operation and maintenance costs decreased 0.1% year over year, while purchased power and fuel costs declined 7.7%. Meanwhile, depreciation and amortization expenses increased 0.8%.
 
Edison International registered an operating income of $302 million in the first quarter compared with $352 million reported in the year-ago quarter.
 
Interest expenses were $225 million, higher than $194 million incurred in the prior-year quarter.

Segment Results

Southern California Edison’s (SCE) first-quarter earnings were 60 cents per share compared with 90 cents a year ago.
 
The Parent and Other segment incurred a loss of 10 cents per share compared with the year-ago quarter’s loss of 5 cents.

Financial Update

As of Mar 31, 2020, cash and cash equivalents were $1,337 million compared with $68 million, as of Dec 31, 2019. Long-term debt amounted to $19.13 billion, higher than the 2019-end level of $17.86 billion.

Net cash from operating activities during the first three months of 2020 was $315 million compared with $210 million in the prior-year quarter. Total capital expenditures summed $1,268 million at the end of the first quarter, up from $1,074 million a year ago.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 26.23% due to these changes.

VGM Scores

Currently, Edison International has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Edison International has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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Zacks Investment Research